What is Success for YouStart as Ghs1.98 Million get Disbursed in Pilot Phase?

The current economic situation in Ghana is plagued with a high standard of living, astronomical inflationary figures, and high unemployment. According to Ghana Statistical Service, the inflation rate proceeding budget reading stood at 75.6%. Inflationary figures from the Ghana Statistical Service have been disputed as not reflecting realities on grounds. Ghana’s inflation rate has been estimated at 148% by Professor Steve H. Hanke, an associate professor of applied economics at Johns Hopkins University which supports the disputed claims against the government statisticians.

With a high cost of living, unemployment remains an albatross on the neck of many youths and young graduates. According to the Annual Household and Expenditure Survey, 1.74 million people, or 13.4% of the entire working population of 13 million people aged 15 and over, were unemployed in the first quarter of 2022. This revelation is alarming given the fact that major government employment program has been implemented nationwide in the period succeeding the report including Nations Builders Corp (NABCO), Planting for Food and Jobs (PFJ), One District, One factory (1D1F), and National Entrepreneurship Innovation Plan among others. Yet youth unemployment is on the rise in Ghana despite government interventions.

The Ghana 2023 budget statement is supposed to be a hope for restoring economic growth. This is featured in the theme as ‘restoring and sustaining macroeconomic stability and resilience through growth and value addition’. It is against this backdrop that the need arises to ask what success means for YouStart.

Through the YouStart program, the government hopes to provide soft loans for the establishment of youth-led businesses, resulting in at least one million new jobs for young people between 2022 and 2025. The execution of important initiatives like YouStart, Economic Enclaves, 1D1F, and Tech Hubs with the limited resources that we have supplemented with assistance from Development Bank Ghana was the commitment in the 2023 budget.

The period for implementation of YouStart is the same as NABCO which promised 100,000 jobs for the youths. NABCO ended as a failed project after the government struggled to provide permanent jobs for the youths after three (3) years. What is interesting is that similar footsteps are being followed with YouStart, especially, the sensitizing of 260 MMDCEs on the implementation of YouStart. Let’s not forget that NABCO also spend parts of its fund’s training MMDCEs for its implementation yet, failed.

According to paragraph 312 of the 2023 budget, the piloting phase of YouStart has helped the government to structure the targeted groups into categories of entrepreneurs grouped into:

  • District Entrepreneurship Programme (DEP) to support nascent micro businesses with micro-loans and starter pack products of up to GH¢50,000 and self-employed businesses with up to GH¢100,000;
  • Commercial programme to support medium-sized businesses with a standardized loan product of up to GH¢500,000 at a concessionary interest rate; and
  • YouStart Grace targets unemployed youth, especially the vulnerable, women, and rural entrepreneurs through faith-based organisations across the country.

To wit, the DEP would largely require MMDCEs to select entrepreneurs who qualify for the support (we can only hope political faithfulness is not a criterion for selection) as the government has an MOU with 11 commercial banks to implement the commercial programme who have already committed of Gh1.169 billion representing 30% of the funding portfolio. These banks include Access Bank, ARB Apex Bank, ABSA Bank, Ecobank, Cal Bank, Consolidated Bank Ghana, Fidelity Bank, FBN Bank, GCB Bank, Universal Merchant Bank, and OmniBSIC Bank.

The 2023 budget revealed that the piloting stage of YouStart impacted 70 beneficiaries and an amount of Ghs1.98 million has been disbursed to support youth-led (below age 40) SMEs according to the 2023 budget. I assume the disbursement was made before the lesson to structure the targeted group was learnt. This would not be the first time government is leading entrepreneurship with fund support for startups, yet, unemployment is on the rise. The rationale is that if more entrepreneurs are being supported by the government through interventions such as National Entrepreneurship Innovative Plan, Presidential Pitch, and now YouStart, these entrepreneurs if 30% should succeed, then employment avenues should be created.

However, in practice, government entrepreneurship interventions have difficulty targeting the right entrepreneurs. Given the winner takes all syndrome in our body politics, interventions follow a similar pattern. This has become a canker and providing a little impact on youth unemployment.

With the rollout of many employment interventions by the government in Ghana, what is important is what success means for these programmes – YouStart? Mostly, the number of applications received for the programme is used as a metric for determining success. This is evident in paragraph 316 of the 2023 budget which states:

Mr. Speaker, the response from the youth has been tremendous since the opening of the YouStart Ghana Jobs and Skills application portal. As at 20th November 2022, about 26,500 applications have been received’.

Again, what does success mean for YouStart? In 2023, the government would roll out the full element of YouStart yet does not have measurable outcomes to determine success. It is trite that the number of applicants cannot be a metric for success for YouStart. Since the policy aims to provide 1 million jobs, then the number of sustainable enterprises established or expanded as well as the number of employment avenues created by these enterprises should rather be a metric for success. Also, the impact on the unemployment rate in Ghana would be keen as a successful YouStart should contribute to reducing unemployment, especially among the youth.

Just like Einstein puts it, ‘God does not play dice’. Therefore, policies should not have inherent unpredictability.

Article by Nathaniel Dwamena

Nathaniel is a free-market policy analyst and president of the YAFO Institute. He engages in activities that promote civil liberty and economic freedom in Ghana. He was part of the team consulted by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ Ghana) to undertake a study on business red tape in Ghana. He has a background in law, geography, and economics.

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